Companies take sector’s challenges to Senate

ATCON wants proposed CST slashed to 0.2%
Telecommunication companies have taking the challenges confronting the sector to the Upper Legislative chamber, with a view to have issues resolved as fast as possible.

The firms under the aegis of Association of Telecommunications Companies of Nigeria (ATCON) equally urged the Nigerian Senate to use its legislative powers to reduce the proposed Communications Service Tax to 0.2 per cent from the nine per cent, already proposed by the Federal Government.

Besides, the body recommended, as an alternative, a tax reform that increases the current Value Added Tax (VAT) by a new one per cent added for the purpose of development of communications.

The President of ATCON, Olusola Teniola, who led a delegation of members on a courtesy visit to the Senate President, Dr. Bukola Saraki, in Abuja, at the weekend, noted that the new tax on ICT services, which is being proposed, would result in excluding 20 million Nigerians, which represents 10 per cent of the country’s population from accessing telecommunication services.

“The proposed nine per cent on ICT services is capable of excluding 20 million Nigerians from accessing the Internet and other ICT services,” he warned.

Teniola noted that the survival of the Nigerian economy is on attracting more citizens into access to Internet and therefore ICT services, stressing that it doesn’t add up if whatever the government does ends up not bringing more people into access.

According to him, the reality of Internet access in Nigeria is that it’s all about mobile, stressing that only about 13 per cent of Nigerians get broadband access via mobile while less than one per cent does from fixed services.

He explained that one of the main reasons the rate of Internet adoption and use is rather slow in Nigeria was the high cost of data subscription.

“A 500MB plan costs typically 5.4 per cent of average monthly income. The current definition of affordability used by the UN Broadband Commission is where the price of a broadband plan is less than five per cent of average monthly income. If we are to use this definition Nigeria is on the cusp of affordability.

“In Nigeria the average income in 2014 was $2970 (GNI per capita, source: World Bank), 40 per cent of the population actually earned less than half that amount. In practice this means that a 500MB mobile Internet plan priced at 5.4 per cent of average monthly income actually costs the majority of Nigerians anywhere between seven to18 per cent of monthly income.

“In 2013, we planned to achieve 30 per cent broadband penetration by 2018. Current access figure is clearly some way off this target and needs measures to boost growth in usage. A sharp rise in tax as being proposed in the CST will achieve the exact opposite of our desire,” he stressed.

Declaring support for the government to make the best of tax efforts, which certainly are key components of strengthening the economy and sustaining industries, Olusola said the truth is that there is severe over taxation in telecommunications industry, which explains the slow penetration of services into unserved areas of the country.

“The truth is that, contrary to popular belief, telecommunication operators and service providers are barely sustaining existence in these times. There are reasons to suggest that the desire to widen the tax net is laudable and that as things stand, telecommunications is about one of the few areas where the net-capture may be widened,” Olusola stated.

Responding, the Senate President, Saraki assured the ATCON’s leadership that the senate would only make laws that would get the economy going, adding that the telecommunications sector is critical to Nigeria economy.

“The ICT sector is critical to the Nigerian economy, as a result, the Senate would never make laws that would push the sector to negative performance rather they would make laws that would increase its performance to generate revenue and create jobs,” he said.